Assessing fairness of selfish revenue sharing mechanisms for airline alliances |
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Authors: | D. Ç etiner,A. Kimms |
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Affiliation: | Chair of Logistics and Operations Research, Mercator School of Management, University of Duisburg-Essen, Lotharstr. 65, 47048 Duisburg, Germany |
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Abstract: | Airline alliances offer flights including flight legs operated by different airlines. A major problem is how to share the revenue obtained through selling a flight ticket among the airlines in a fair way. Recently, Kimms and Çetiner [1] have proposed fair revenue allocations based on the solution concept nucleolus, which assumes that the decisions of the alliance are given centrally. However, in an alliance, each airline has a selfish behavior and tries to maximize its own revenue. The contribution of this paper is twofold. First, we provide a method to evaluate the fairness of revenue sharing mechanisms applied in a selfish setting. The method includes a simulation model for the booking process of the alliance and uses the nucleolus-based allocations as benchmark. Second, we develop a revenue sharing mechanism based on the transfer of dual prices. The fairness of the new mechanism and several other existing approaches is assessed through a numerical study. |
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Keywords: | Revenue management Revenue sharing Airline alliance Fairness Selfish behavior |
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